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Concept
Crony capitalism
Summary
Crony capitalism, sometimes called cronyism, is an economic system in which businesses thrive not as a result of free enterprise, but rather as a return on money amassed through collusion between a business class and the political class. This is often achieved by the manipulation of relationships with state power by business interests rather than unfettered competition in obtaining permits, government grants, tax breaks, or other forms of state intervention over resources where business interests exercise undue influence over the state's deployment of public goods, for example, mining concessions for primary commodities or contracts for public works. Money is then made not merely by making a profit in the market, but through profiteering by rent seeking using this monopoly or oligopoly. Entrepreneurship and innovative practices which seek to reward risk are stifled since the value-added is little by crony businesses, as hardly anything of significant value is created by them, with transactions taking the form of trading. Crony capitalism spills over into the government, the politics, and the media, when this nexus distorts the economy and affects society to an extent it corrupts public-serving economic, political, and social ideals.
The first extensive use of the term "crony capitalism" came about in the 1980s, to characterize the Philippine economy under the dictatorship of Ferdinand Marcos. Early uses of this term to describe the economic practices of the Marcos regime included that of Ricardo Manapat, who introduced it in his 1979 pamphlet "Some are Smarter than Others", which was later published in 1991; former Time magazine business editor George M. Taber, who used the term in a Time magazine article in 1980, and activist (and later Finance Minister) Jaime Ongpin, who used the term extensively in his writing and is sometimes credited for having coined it.
The term crony capitalism made a significant impact in the public as an explanation of the Asian financial crisis.
Official source
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